A man made a loan of $100 to be repaid with $105 at the end of one month. What was the annual (simple) interest rate?

Simple interest rate is used to calculate the interest amount on the borrowed capital. We calculate…

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Finance

What was the annual (simple) interest rate?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter9: Accounting For Receivables

Section: Chapter Questions

Problem 21MC: A customer takes out a loan of $130,000 on January 1, with a maturity date of 36 months, and an...

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Concept explainers

Interest Rate

When you deposit your money with the bank, the deposit earns you some extra money at the end of the specific period – something more than what you deposited. That amount of money that the bank pays you for keeping the money with the bank is the “interest” and the percentage at which the bank pays you for your amount is called the “interest rate”.

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A man made a loan of $100 to be repaid with $105 at the end of one month. What was the annual (simple) interest rate?

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